ACA/Obamacare: How does it affect Huerfanos?
by Dr. David Zehring
Obamacare. You’re probably familiar with the term, but you may not know what it describes, at least not in significant detail. The term itself is used much more often by those who oppose it than by those who support it. The correct name of the legislation itself is the Patient Protection and Affordable Care Act, usually abbreviated as ACA. But what exactly is it, and how does its implementation affect the citizens of Colorado, and more specifically the citizens of Huerfano County?
It’s important to understand that essentially all of the provisions of ACA aren’t scheduled to take effect until 2014.
The ACA provides for the development of state-run health insurance exchanges that would offer consumers choices as to which health insurance product best fits their needs and their budget. While these plans might differ in specific provisions, all must include so-called “essential health benefits.”
Those benefits must include preventive care, emergency services, maternity care, hospital and doctor services and prescription drug coverage. Further, the plans must not discriminate against any individual because of age, disability, life expectancy or pre-existing condition, and there can be no lifetime limit on payments for care. Children under 26 years of age can remain covered under their parent’s policy.
The federal government has allocated $516 million to be divided among all the states that choose to participate to assist them in establishing these health insurance exchanges. The federal government will also provide financial subsidies to those individuals who are unable to afford the full cost of the insurance products offered through the exchanges.
The provision of the ACA commonly known as the Individual Mandate could add 15 million citizens to the health insurance pool, thus spreading the risk wider and reducing the per capita cost of health care services. Those who choose not to participate could be asked to pay additional tax penalties of up to $2000 per person or employee. Such penalties will be phased in gradually over a number of years.
An equally important provision of the ACA is the expansion of Medicaid eligibility and services. Currently, the cost of providing Medicaid services is shared by each state with the federal government. Under the ACA, those services would be available to approximately 17 million people that are currently ineligible, by standardizing the eligibility threshold to individuals and families at or below 133 percent of the federal poverty level (about $11,000 for an individual and $25,000 for family of four). The entire cost of this expansion of Medicaid services would initially be met by the federal government. By 2020, all states would be required to pay for ten percent of the cost of expanded Medicaid eligibility.
So what does all this mean, potentially, for Colorado and for Huerfano County? Statewide, it would add upwards of 400,000 people to the Medicaid program and nearly as many to various private insurance programs. With an expansion of both preventive care and care for chronic illnesses such as diabetes, high blood pressure, heart failure and asthma, the need for emergency services and hospitalizations should be reduced, access to primary care services enhanced, and the need for primary care providers increased.
The impact here in Huerfano County, with one of the lowest per capita income levels in the state, would include a significant increase in the Medicaid-eligible population and a smaller increase in those individuals with private insurance.
While this might sound like all good news, there is a down side for Spanish Peaks Regional Health Center (SPRHC). Currently, about 57 percent of patients seen at SPRHC and the Spanish Peaks Family Clinic are covered by Medicare, which pays SPRHC 101 percent of the cost of providing care to Medicare patients. Fifteen percent of SPRHC patients are currently covered by Medicaid, which reimburses at about 50 percent of cost. About 10 percent of SPRHC health care services are provided to patients with no insurance, for which essentially no payment is collected. The remaining patient care services are paid for by private insurance plans, most of which cover the cost of care and provide a small amount that exceeds the cost of that care.
The increase in the Medicaid population will reduce the cost of totally uncompensated care, but if we see more patients with Medicaid, we will still provide care and services to them at a loss to SPRHC and the Family Clinic. So the downside is that we can expect to see more Medicaid patients whose care has to be subsidized since Medicaid reimburses at 50% of cost.
Also, it is likely that some customers will choose to save money by purchasing private insurance products that include high deductibles and high co-pays, and it has always been true that these deductibles and co-pays frequently are not paid and remain uncollectible.
So, is the ACA (or Obamacare, if you prefer), a good deal for Colorado and for Huerfano County? One can argue that any program that expands access to primary care, preventive care, maternity care and all the other benefits included in this legislation must be a good thing for our state and our county.
If the federal government is assuming most of the cost, then we Coloradans won’t have to shoulder much of the financial burden. But the cost of providing expanded access and services hasn’t been addressed adequately, and just how the federal government intends to cover this expansion of coverage isn’t clear.
Webster’s New World Dictionary defines “reform” as “to make better by removing faults and defects.” Has the ACA really done that? Not completely, to be sure. Maybe the ACA is, on balance, a step in the right direction, but the health care delivery and payment system will still have plenty of “faults and defects.”
Dr. David Zehring is a retired reconstructive surgeon, and a board member of the Spanish Peaks Regional Health Center.